Canada / Analyst Insights
The Effects of Seasonality on Canadian Credit Unions

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by Olivia Ross, Industry Analyst
Jun 03 2019

Although Canada’s “Big Five” banks dominate the country’s financial services landscape, the Credit Unions industry in Canada (IBISWorld report 52213CA) remains a vital part of the domestic economy. Positive macroeconomic conditions benefited the industry over the five years to 2019, during which time revenue increased at an annualized rate of 2.4% to total $17.4 billion. While both banks and credit unions provide similar services, such as checking and savings accounts, credit unions operate as nonprofits and can offer higher interest rates on savings accounts and lower interest rates on loans and credit cards.

Credit unions may target small businesses specifically for business loans, as they are less able to compete to provide loans to larger businesses with more complex financial needs. Highly fragmented industries that are dependent on seasonal demand, including the four listed below, are also likely to rely on credit unions during the summer months to cover the labour, purchase and operational expenses associated with seasonal spikes in demand.



Motorcycle, Boat & ATV Dealers in Canada

The Motorcycle, Boat and ATV Dealers industry in Canada (44122CA) has grown steadily over the five years to 2019. Supported by rising per capita disposable income and leisure time, industry revenue increased at an annualized rate of 4.9% over the five-year period to total $8.1 billion. However, industry operators also contended with rising interest rates. Most operators work on a localized scale, primarily serving consumers close to the industry retail front. To adequately respond to increased demand during the summer months, operators are likely to seek funding from credit unions to finance large purchases of expensive vehicles. As the industry’s barriers to entry and market share concentration remain low, industry operators will likely continue to seek the services of credit unions, which derive 23.9% of total revenue from business loans.

Street Vendors in Canada

The Street Vendors industry in Canada (72233CA) is poised for growth over the summer as hot dog carts and ice cream trucks capitalize on warmer weather to serve tasty treats. Over the five years to 2019, entrepreneurial food truck operators have entered the industry to cater to changing consumer preferences that favour gourmet offerings and unique food concepts. As a result, industry revenue is expected to grow at an annualized rate of 3.1% to $322.4 million during the period. Furthermore, according to Statistics Canada, nearly 70.0% of industry enterprises are sole proprietorships. As the industry continues to evolve from one that traditionally served basic food and beverages to one at the forefront of the nation’s gastronomic revolution, small operators will benefit from the variety of services offered by credit unions.

Travel Agencies in Canada

Although the Travel Agencies industry in Canada (56151CA) has contended with competition from online travel booking over the five years to 2019, industry operators have benefited from rising consumer spending and tourism. Over the five years to 2019, the industry is expected to increase at an annualized rate of 3.0% to $2.3 billion. A large proportion of travel agencies are owner-operated businesses and do not have employees or independent contractors, highlighting the small business-oriented nature of the industry. There is also a high instance of franchising within the industry, as many small operators benefit from the marketing power, technological prowess and national footprint a large brand offers. Industry operators may seek a business loan from credit unions either to open a new franchise, expand an existing location or respond to increased demand during the summer months.

Landscaping Services in Canada

Demand for services in the Landscaping Services industry in Canada (56173CA) is also highly seasonal. Although many companies provide snow clearing services, overall demand is significantly lower during the winter months than it is during the warmer summer months. The industry’s seasonality has contributed to its slight growth. Over the five years to 2019, industry revenue is expected to increase at a modest annualized rate of 1.4% to reach $7.8 billion. The industry is highly fragmented, with the top four operators accounting for less than 5.0% of total market share collectively. Furthermore, nearly 80.0% of operators employ fewer than 10 workers. Encouraged by low barriers to entry, small companies continue to enter the industry and win proportions of total market share by serving narrow geographic areas. These operators are likely to use credit unions to receive the funding necessary to complete larger projects, including those for businesses, which have continued to comprise a key market for industry operators.


Edit & Infographic Design by Tafannum Rahman, Editor

Chart Design by Robert Miles, Senior Strategic Market Research Analyst